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Msg  293062 of 299744  at  10/16/2020 10:57:08 PM  by

jstratt


Things are moving in O&G, direction unclear

 I have been on pause in energy investing as it has been a tough year. In fact the toughest year ever. Fortunately while taking losses I have held on to my shirt. Roughly I am willing to add to CVX at or below $69 and COP at or below $29.
 
 The interest of COP in CXO and by an unknown party in EOG suggests Oils are trading in fair value territory for $40 Oil. Further, street reaction has been positive toward quality deals. I think that is good news.
 
 On the other side this Pandemic which on some days I have referred to as a Scamdemic seems to be increasing. Having read about past Pandemics the idea about how they come in waves has a ring to it. Could things get shut down again? Just a couple months ago I thought if we could get to the end of the year, things would look up for Oil. Now perhaps spring!
 
 I have a small position in SU. Starting the year at about $33 US$ it is now under $12. Analysts have been increasing estimates which sit at $0.50c for the quarter reported on Oct 28 I think. A national champion Oil company with more market equity than debt seems like a good long term value. I rate it a buy!
 
 About taking Oil stocks seriously. What if we had another big bad wave of China virus or troubling mutation? My interpretation of market history is that the SP500 might have as much or more risk than high quality Oils from where we now sit. I think about that as an SP500 dropping by 50% risk vs a SU or CVX possibly holding closer to existing lows.
 
 I have my Lottery ticket plays as well, namely CPG. Currently $700MM Market Cap and $2 bil debt. Mostly I avoid bad balance sheets.
 
 To sum it up I have all the Oil I need in my portfolio. I will buy more if the market demands that I take it. All I ask for is a quality balance sheet and lots of share appreciation at $50 Oil. 


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